September 23, 2009

Arizona Public Service Co. will get $70.5 million in stimulus funding to study ways to cut carbon-dioxide emissions from coal power plants that contribute to global warming, the Energy Department said Tuesday.

APS will use the money for a 60-acre research project at the Cholla Power Plant between Holbrook and Winslow on Interstate 40 in northern Arizona's Navajo County.

"This project allows us to research some of the issues with using coal and brings economic activity to a part of Arizona where the unemployment rate is about 13 percent,"

APS spokesman Steven Gotfried said.

The complex research will study cleaner ways to make electricity from coal and how to reduce the amount of carbon dioxide from coal plants that is released to the atmosphere.

APS researchers will use heat and pressure to convert coal to syngas, a fuel that can be piped and burned similar to natural gas. That process also will create char, which can be burned for electricity.

APS will attempt to capture the carbon-dioxide emissions from burning char for another use.

"The CO2 from burning the char will be food for algae," Gotfried said.

The algae will use the CO2 like a fertilizer, and APS will test if the algae can be grown fast enough to be raised for fuel. Algae contain oils that can be pressed out and converted to biodiesel for vehicles.

The project is a takeoff of two existing research projects at APS. The company has tested algae as a way to get rid of carbon dioxide at a natural-gas burning plant, and also has worked with gasification.

The grant is part of $1.52 billion in the stimulus act earmarked for research into ways to capture and store carbon from power plants.

APS also is drilling deep wells near Cholla and pumping CO2 into the ground to see if it can safely be stored there, assuming it could be captured somehow from the power-plant emissions.

That project is using CO2 purchased for the research, not from the power plant.

The Algal Biomass Organization promotes the development of viable commercial markets for renewable and sustainable commodities derived from algae.

2009 Algae Biomass Summit

Please join the Algal Biomass Organization as we host the third annual Algae Biomass Summit to explore the emerging industry of algae as a feedstock for biofuels and its related products. The event will take place October 7- 9, 2009 at the Marriot San Diego Hotel & Marina in San Diego, California.More Information

The utility wants to capture carbon from a coal-fired plant and feed it to algae to make biofuel. It’s a less common form of carbon capture, but could offer the added benefits of a green fuel as an end product.

Arizona Public Service Co. has landed a $70.5 million Department of Energy grant to try to feed algae with the carbon dioxide coming from its coal-fired electricity plants.

The grant will support the utility's carbon sequestration project at its Cholla Generating Station in northeastern Arizona, the Phoenix Business Journal reports. The project calls for the plant feed its carbon emissions to an algae pond, and that algae will be converted to biofuel.

Using algae to absorb carbon emissions is a more novel approach, though at least one other project of its kind is seeking DOE funding. Algae-to-biofuel company Origin Oil said last month that it was seeking grants for a project that would see captured carbon fed into algae ponds.

OriginOil named the DOE's Idaho National Laboratory and materials science company Media and Process Technologies as partners, and said it would seek grants from a smaller, $100 million pot of DOE money aimed at more experimental carbon capture and storage technology.

One ton of algae should be able to absorb about two tons of carbon dioxide through its life cycle, OriginOil CEO Riggs Eckelberry said at the time. The trick will be to get the captured carbon from smokestack to algae pond. OriginOil intends to spend about $1 million on an initial test phase and up to $20 million or so on a working demonstration project, he said.

Of course, making fuel from algae is harder than it may look, although about 57 companies are busy trying it out. The costs of harvesting algae making it a challenge to produce fuel at prices that can compete with petroleum-based fuel (see Coming Soon: $2 a Gallon Diesel From Algae?).

Algae fuel enters the limelight once again. Several we weeks ago, I wrote about Exxon Mobile’s foray into the algae energy space and in the past few days, the first algae fueled car hit the road in a publicity stunt for the film FUEL. The film is a Sundance file winner for best documentary and takes a look at an alternative energy future.

A 2008 Toyota Prius, dubbed the Algaeus is expected to finish the cross country tour in NYC on Friday. The car was modified a bit with an extra battery pack and advanced energy management system, but the engine wasn’t modified in any way to accommodate the algae based fuel. That’s the beauty of algae fuel – it works with the existing petroleum infrastructure and can be refined into gas, diesel and jet fuel. Not to mention it’s not dependent on valuable farmland like ethanol is.

Privately held Sapphire Energy is providing the algae based mixed fuel which will run the Algaeus 150mpg. Granted, it’s only a 5% mix and it’s going to be many years before you see algae based fuel at the pump, but algae based fuel is an exciting endeavor that will be interesting to follow in the coming years.

The Algaeus/FUEL tour began in SF on Sept 8th and ends in NYC this Friday, culminating in the theatrical release of FUEL. The tour stopped in Erie, PA today and heads to DC tomorrow.

The University is working with businesses and other schools to develop algae into a biofuel.

Roger Ruan, the University researcher working on the wastewater algae project, examines algae Friday in St.Paul.

Responding to governments and consumers that are increasingly desperate to find an alternative to petroleum, the University is forming partnerships across the nation to look into one substitute in particular: algae as a biofuel.

The University teamed up with Lockheed Martin and 3M to grab a $15 million stimulus grant to take an already-running algae-to-fuel research project to the next level.

The project, which began in 2007, is using a Metropolitan Council-owned plant in St. Paul to grow algae on municipal waste water and test their ability to both remove pollutants and make significant amounts of oil that can be turned into fuel.

The project has struggled to maintain funding in the past, but University officials hope this grant will fund the next phase: developing a commercial pilot system to produce algae in mass quantities, and in all climates.

The University was also asked to join a consortium with Arizona State University — which is also seeking stimulus dollars — to investigate the potential to commercially produce a variety of biofuels, such as renewable gasoline, diesel and jet fuel.

“There are a number of groups pursuing this money and it’s a lot of money,” Rod Larkins, associate director of the University’s Initiative for Renewable Energy and the Environment, said. “We think this is a winner take all kind of deal.”

Only a few consortiums researching algae fuel will be funded by the stimulus nationwide, each using around $50 million for their respective projects, Larkins said.

Another consortium may be in the works, but plans are not finalized yet, Larkins said.

Food verses fuel

Doubts about the ability for biofuels to replace oil have not been far behind developments, and biofuels produced from food crops like sugarcane and corn have been blamed for higher food prices worldwide.

But with rising oil prices and a push from the government for cleaner energy, algae fuel has been thrown into the center of the biofuels debate. The reason: fuel produced from algae eliminates the food verses fuel question, Larkins said.

At its most basic level, algae only needs sunlight, water, carbon dioxide and fundamental nutrients to grow. Algae can be cultivated on non-arable land using wastewater or seawater, are grown easily in controlled conditions and can double their size in a day.

“People are thinking that algae is probably the one that could produce a significant energy crop to solve the energy issue,” said Roger Ruan, the University researcher working on the waste water algae project.

Business interest

The interest in algae as a fuel source now permeates more than just research circles.

In July, U.S. oil giant Exxon Mobil said they planned to invest up to $600 million in research dedicated to turning algae into fuel. “Exxon Mobil has been the most hostile oil company to renewables, and their first investment was in algae?” Todd Taylor, a renewable energy attorney with Fredrikson and Byron, said. “That tells you something.”

Taylor, in cahoots with the University, also put on a conference in August which addressed algae potential for businesses. The conference drew 130 individuals, many of them business leaders in the Midwest who want to learn more about algae’s potential, Taylor said.

However, many businesses aren’t in the position to start algae operations now.

“Even the most aggressive, well-funded algae companies aren’t going to start and ramp up algae projects until 2011 and 2012,” Taylor said, adding that for most businesses, the commercial technology and funds, just aren’t there yet.

Are algae the future? Not yet.

The exact science of turning algae into fuel is still being developed, and many question its ability to produce fuel on a scale that can meet transportation needs.

Then there is the issue of cost.

The U.S. Department of Energy had to abandon a 20-year-long algal biofuel research project in 1996 because of the relatively high cost of turning algae into fuel and low cost of petroleum.

“There is still a ways to go with algae,” Ruan said.

Despite this, scientists and companies all over the world are trying to be the first to figure out the best ways to create algae biofuels, a discovery that Larkins thinks will eventually join with other biofuels to solve energy issues.

“The reality is that algae will not be the only source of biofuels,” Larkins said. “There probably is not a silver bullet related to biofuels, more like silver buckshot.”

A sampling of algae biofuel companies in the Southland * Biolight Harvesting Inc. of San Diego develops fuels and chemicals from blue-green algae, or cyanobacteria.

* Kent Bioenergy Corp. of

San Diego originated as a company that bred hybrid striped bass in the 1970s. Before producing algae for energy, the company used it to clean water in its fish pens.

* Carbon Capture Corp. of La Jolla uses carbon dioxide from sources including power plants to grow algae for biofuel.

* Sapphire Energy of San Diego produces "green crude" from algae that can substitute for crude oil and has raised more than $100 million from investors including Bill Gates of Microsoft Corp. Its algae fuel helped power a Continental Airlines test flight this year.

* General Atomics of San Diego, known for producing the Predator unmanned aircraft, received a $19.9-million military grant in December to research ways to drive down the costs associated with algae jet fuel production.

* Synthetic Genomics Inc. of La Jolla was founded in part by J. Craig Venter, whose previous company, Celera Genomics, spearheaded the effort to map human genes. The company will pair with Exxon Mobil Corp. in a $600-million venture.

* OriginOil Inc. of Los Angeles has a Quantum Fracturing process that helps break down algae cell walls in order to extract oil.

* Scipio Biofuels Inc. of Aliso Viejo is a year-old company developing a "closed photobioreactor" system for algae to be used in large-scale plants and in smaller systems for specific industries such as trucking or airports.

* Science Applications International Corp. of San Diego will use a military contract potentially worth $25 million to develop a cost-effective algae-based jet fuel.

* Kai Bioenergy Corp. of San Diego has a patented technology for the cultivation and processing of microalgae to produce bio-oil.

* American Biodiesel Inc., doing business as Community Fuels in Encinitas, owns one of the state's largest biodiesel plants and has branched into algae development.

It's jobs, it's economics, it's sustainability, and now its booming. Based on optimistic speculation, high risk companies are turning regions of the US into research hubs in hopes of discovering a legitimate process for utilizing algae as an alternative to fossil fuel. But is the risk too high?

Algae, as an energy source, has been tampered with since the 90's. For years, researchers have understood its potential and have wanted to explore the extent of the autotrophic organisms, but have lacked the capital to make any sort of headway.

Now, with the boom of hybrid cars, awareness of alternative energy sources, and dwindling supply of fossil fuels like oil, algae research is making its way onto corporate and even government budgets.

According to the Los Angeles Times, venture capitalists invested $176 million last year into the development of biofuel from algae. The Defense Department has also pitched out about $50 million to San Diego research companies to assist in algae research. Even the big oil companies like Exxon have scrambled to grab onto the next big resource by partnering with Synthetic Genomics Inc.—a nearly $600 million dollar deal.

Monetary momentum is driving the lab successes and making many believe algae can and will be nature's biofuel of the future.

The benefits of algae are obvious: while pulling in carbon dioxide—the gas causing the global warming obsession, algae is converted into oil through nature's own photosynthesis process and used to power our energy hungry society.

Not only would it revolutionize fossil fuel production, but it would generate jobs in the expanding green job market—a market that could take on many of the nation's unemployed.

Pessimists of the movement, however, believe companies are investing too much time and money into something that hasn't offered any sort of tangible, competitive product, and maybe they are right.

Gas by the gallon averaged $2.58 a gallon last week, a minimal cost compared to the equivalent amount of algae fuel, which could cost as much as $60-$80 and at the very least $20 a gallon.

High priced gas, whether drilled or harvested, push consumers away in a bottom-line society and at algae's current rates, few will buy into the concept.

Not to mention, no labs have even been close to producing the amount of algae fuel necessary to be commercially sustainable, says Tiffany Hsu.

Just because the idea of a product looks good does not mean it is going to succeed. Electric cars in the 90's were evidence of that. Consumers had no need to switch over and with the pressure from oil and auto big shots, it flopped.

The questions and speculation will haunt investors until either oil runs out or algae gets competitively priced with oil. If either doesn't happen fast enough, algae may flop.

We already use algae for fuel. It is in the car you drive, a fossil fuel.Today's crude oil originates from algae that has cooked in the layers of theearth for hundreds of millions of years. Fast forward 20 years. The USDepartment of energy estimates global demand for energy will increase by 50% bythe year 2030. Most of this energy growth will come from the Emerging Markets ofChina, India, the Middle East, Africa, and the Americas.

"Emerging Markets Online asks - how will the world meet this increasing demandfor energy? The Algae 2020 study answers these questions and presentsreal-world, practical, achievable mid to long-term solutions for algae biomassand biofuels production," said Thurmond. "The US, Europe, China and India areaddicted to imported foreign oil. Each of these countries has a plan to reduceoil consumption with biofuels. Oil and gas majors BP, Chevron, Exxon and Shellare investing in algae as their logical feedstock of choice to produce biofuelswithout compromising the rainforests or arable land. Plus, algae consumes CO2from power plants, a double benefit for carbon reduction and biofuelsproduction." said Thurmond.

Can Algae Help Feed The World?.

We already use algae to feed livestock. Fish and cattle feed on algae fromoceans, rivers and in ponds. Chickens feed on proteins from algal biomass, andhumans consume these livestock. In the Emerging Markets of China, India, Africa,the Middle East and Africa, there is an increasing demand from rising middleclasses for more beef, chicken, fish and protein in their diets, representing ahuge opportunity for algae feedstock. According to of the United Nations,agricultural output will need to double by 2050 to feed more than 9 billionpeople, which notes increasing food production is a moral imperative to meetgrowing population demands.

"Emerging Markets' Algae 2020 study examines these challenges and finds algaewill play an increasing role in bio-industrial production systems to createhigh-value feed for livestock and human consumption, " said Thurmond. "Algaefeedstocks have a key role to play in feeding this massive demand for food fromthe Emerging Markets by 2050," said Thurmond.

Will Industrial Algae Projects Help to Feed and Fuel The World?

"The increasing needs from Emerging Markets for feed and fuel are creatinggreater demands on arable lands" said Thurmond. "Algae 2020 concludes thecommercialization of algae technologies will play a key supporting role inbridging the gap between today`s resources, and the future Emerging Marketdemands for feed and fuel," said Thurmond.

The Algae 2020 study was written by Will Thurmond, President of energy strategyand forecasting firm Emerging Markets Online. The Algae 2020 study was based ondozens of on-site visits with algae producers and more than four years ofcollaborations with scientists, biofuel producers, associations, governments,investors, inventors and NGOs.

We usually don’t report on the renewable energy or environmental impact beat, but sometimes you see something that is just too cool not to share. Algaeus, the world’s first algae-powered plug-in hybrid car, was unveiled in San Francisco last week. The pet project of algae fuel producer, Sapphire Energy, Algaeus is so efficient that SE is claiming it could make an entire coast to coast cross country trip on as little as 25 gallons of fuel. Just to prove it, the prototype will be traveling with a host of other ‘green’ vehicles to tour the US and promote alternative fuel. Check out a brief video from AutolineDetroit after the break.

This car is traveling across the country...on algae based fuel. Cool.

According to the press release, the coast to coast trip will be a ten day journey (September 8 -18) that culminates in the nationwide premier of the new movie Fuel by Josh Tickell of Veggie Van fame. See the trailer below. While the media coverage of the movie is sure to be hyperbolic, I’m much more interested in the premises behind Sapphire Energy. This San Diego based company hopes to use its algae-based fuel to work in the three major petrol markets: gasoline, diesel, and jet fuel. They plan on ramping up production to a rate of than 2 million gallons of diesel per year in the next two years. That’s a small blip on the petroleum market, but a blip that is arriving much sooner than many expected.

Sapphire Energy uses algae to photosynthetically produce a fuel using only water and carbon dioxide. That fuel is near to being chemically identical to the fuel you put in your car. It’s a ‘green’ energy because the carbon captured during fuel production is more or less equal to the carbon released during burning. Current refinement and production levels limit the algae-fuel to being used as an additive. The eventual idea is to grow much more algae in endless rows of transparent containers, sort of like a fuel-farm. While algae farms could be grown almost anywhere with sunlight and water, Sapphire Energy wants to focus on non-arable land. One of the big advantages algae-fuel has over biodiesel, they contend, is that it can be produced without interfering with food crops and the food market.

The Algaeus, a modified Prius, looks really cool, but the 25 gallon claim is likely hiding some hand-waving. How often do you think they’re going to rely on plugging in the plug-in hybrid car? And what about the algae to normal diesel fuel mixture? Supposedly it’s only 5% or so. Whenever a technology is linked to a movie, I get a little skeptical, but even if the Algaeus is fueled by hype, I think Sapphire Energy is based on some really promising concepts.

Fossil fuels have many disadvantages, but the one that springs to mind right now is immutability. It takes millions of years for FFs to develop, so you can’t design new ones. Oh, the production and processing wizards can turn crude oil into everything from petrol to plastic, but the raw material stays the same. Working with a living medium like algae doesn’t just capitalize on promises of ‘green energy’ it also links up with the accelerating research in biotechnology. Genetic engineering, present and future, will allow us to refine and improve algae-based fuels for years to come. Green is good. Green and evolving is better.

SAN DIEGO -- Tim Zenk is surrounded by green. In a lab near California's coast, shades of emerald, lime and chartreuse fill petri dishes, beakers, 14-foot plastic bags and long swirling pools.

When Zenk looks around, he also sees gold.

Inside the 70,000-square-foot lab sit thousands of strains of algae, the slimy substance that grows in swamps and dirty swimming pools. Sapphire Energy, the entrepreneurial company where Zenk works as vice president of corporate affairs, wants to turn the green liquid into fuel for cars, trucks, jets and potentially far more. Algae could someday shift the country's energy mix, Zenk said, blunting some of the need for oil and helping to limit climate change.

It is a big bet with high stakes. Venture capitalists, including Bill Gates' financing arm, infused Sapphire Energy with a combined $100 million. Exxon Mobil Corp. this summer invested $600 million in a research partnership with San Diego biotechnology company Synthetic Genomics Inc. That investment could swell to billions of dollars, Exxon Mobil said.

Now Congress is taking a look. One of the most basic organisms, algae grows quickly, eats carbon dioxide and produces fats that can be twisted into fuels. It can make that fuel without using land needed for crops, or using crops needed for food.

That makes algae hot in a warming world.

"Algae biofuel is the most promising liquid replacement fuel on the horizon," said Kenneth Green, resident scholar with the conservative American Enterprise Institute. "The chemistry will be cracked, and the ability to grow liquid fuel all over the country will be a game-changing event."

It could be years, however, before it is clear whether algae can meet expectations. The ability to get research out of the lab and into the marketplace is about a decade away, Green and other analysts said. Before that can happen, entrepreneurs must find a way to bring down the cost of turning algae into fuel.

Researchers and entrepreneurs are working to speed that process. The challenge is finding, nurturing and even creating algae strains that can be grown and harvested cheaply at a worldwide scale, said Stephen Mayfield, one of Sapphire Energy's founders and head of the Mayfield Lab at the Scripps Research Institute in San Diego. That kind of engineering already is used, he said, to make corn and other food crops cheap enough to feed the world's population.

"It's like we're at the stage of the first automobile," Mayfield said. But he is confident advancements will come quickly. With algae fuel estimated to cost about $10 a gallon right now, Mayfield said, he only needs to make algae three times more efficient to compete economically with gasoline. "That's pretty easy to do," Mayfield said.

To make research happen faster, Mayfield earlier this year brought together algae researchers in a consortium called the San Diego Center for Algae Biotechnology, or SD-CAB. It unites experts from the University of California, San Diego; the Scripps Research Institute; and the Scripps Institution of Oceanography.

Mayfield hopes those scientists will soon be working with other algae experts. SD-CAB this week applied for a Department of Energy grant that would provide $50 million over three years. In filing the submission, SD-CAB teamed with Lawrence Berkeley National Laboratory; the University of Nebraska; Johns Hopkins University; Rutgers University; Princeton University; Cornell University; the University of California, Davis; and Brooklyn College in New York. Winning the grant would trigger significant contributions of money from nine corporate partners.

But there are political challenges that could dwarf the scientific ones. Ethanol became the biofuel darling because senators from Corn Belt states backed it, Mayfield said. Algae can grow in many places but has no official home.

"There are no senators for algae-growing states to go back to Congress and say, 'Stop giving money to corn and give it to algae,'" Mayfield said.

Sapphire and SD-CAB are trying to build political allies. Zenk and Sapphire President Cynthia Warner frequently visit Washington, D.C., to talk to lawmakers and policy advocacy groups. Both will be in town today to promote a cross-country trip by a plug-in hybrid van that uses algae fuel.Algae research ultimately needs billions of dollars to build demonstration projects testing algae fuel's commercially viability, Zenk said. And that money might not come without a political landscape that supports making fuel from algae.

"One of our policy objectives here is to create a national interest in algae," Zenk said. "If there isn't a national interest, it just doesn't happen."

Algae moves to center stage

Up until a few years ago, As Mayfield and Zenk tell it, algae research was mostly hidden in labs, the province of what Mayfield -- describing himself -- called "nerdy science guys." Mayfield has been studying algae genetics for about 25 years.

A combination of events pushed algae into the spotlight, Mayfield said. Many people began to realize that climate change was already happening. Then oil prices spiked.

Sapphire Energy was born in a coffee shop in San Francisco about three years ago, when a group of friends who also were scientists and entrepreneurs talked about the perils of ethanol and debated which biological organisms might best be turned into fuel, Zenk said. They considered everything from bacteria to yeast to algae.

The trio perused research on industrial uses of algae and found that Mayfield had written a large number of the academic papers, Zenk said. The entrepreneurs talked to Mayfield, settled on algae, and set up shop in San Diego.

The fledgling company snapped up patents. When they started, the intellectual property field was fairly wide open, Zenk said, but Sapphire now has more than 200 patents in the area. Sapphire, Zenk said, erected a "white picket fence" around its technology.

After preliminary work to prove what they suspected about algae's potential, Sapphire about a year ago announced its existence and its $100 million in venture capital funding. The company said that it had developed a proprietary technology to engineer algae so that the oils it produces are molecularly similar to crude oil.

Then President Obama took office and Congress began pushing to deal with climate change.

"You can see kind of this alignment of the stars," Zenk said. In addition to climate concerns, he said, "we do have energy security issues. We do have geopolitical things that we have to address as a nation to get us out of the messes that we're in. We do believe now as a nation we have to find an alternative supply of crude oil in order to continue to grow and develop our economies of the worlds."

"That really is right in algae's sweet spot," Zenk added. "There really isn't any other technology that really can claim that."

Exxon Mobil bankrolled algae research in July, picking a company led by J. Craig Venter, who worked on sequencing the human genome (Greenwire, July 14). Exxon Mobil in its partnership agreement set up a series of milestones that, if met, would lead to the infusion of potentially billions of dollars, said Exxon Mobil spokesman Rob Young.

The oil company sees fuel made from algae as a product that eventually could be processed at its refineries and sent to gas stations, not requiring the development of new infrastructure. Young concedes that is probably 10 years off and "there are some hurdles still to be overcome."

"The whole design of this program is to produce something cost-effective," Young added.

Exxon Mobil's $600 million investment is not a large amount for a company of its size, said Green with AEI. At the same time, he said, "they're not a company known for throwing money away."

Exxon Mobil's entry into the algae arena increases the optimism of those like Zenk and SD-CAB researchers.

"They've decided that algae is a viable technology," Zenk said. "It validates what we believe to be true."

Exxon Mobil won't talk about its production goals or timeline for algae fuels. Sapphire has announced aggressive timing estimates. The company said it will produce 1 million gallons of diesel and jet fuel per year by 2011, an amount Zenk concedes is still tiny and reflective of a research and development company. The United States consumes 378 million gallons of gasoline a day in vehicle usage.Sapphire said that by 2018 it will make 100 million gallons, a level that Zenk said is equal to a small refinery. By 2025 it plans to produce 1 billion gallons of fuel per year. The company released its timeline in April in part to get the attention of Congress and the Obama administration, Zenk said.

"We wanted policymakers to understand that the timeline is narrower," Zenk said. "It's not 10 to 20 years away."

Making 'designer algae'

There is a treasure hunt at Sapphire Energy's lab, where about 100 people work late into the evenings.

Researchers there are creating new strains of algae by modifying their DNA. Every day, they look at 8,000 new strains.

The work is meticulous. Researchers place droplets from 92 different strains onto petri dishes and load those into machines that run 18 hours every day, searching for strains where new DNA has survived. Those strains then move through a series of tests to determine how hearty they are, whether they can flourish outdoors in salt water, whether they are resistant to attack from predators and how easily they can be harvested. A high lipid content also is important.

The best strains end up in a sort of greenhouse, a room at the back of the lab with an open roof and San Diego sunlight pouring in. Algae fills large plastic bags that when folded in half stand about 7 feet tall. On a recent day, Zenk grabbed a bag and pointed to the green oil inside.

"This one is pumping it out, churning it out," Zenk said.

In a UCSD lab about 2 miles away, molecular biology professor Susan Golden and her researchers work with a portfolio of mutant algae strains, each one missing one of the genes normally found in the organism. The library holds 2,451 strains, capturing 88 percent of the genome, Golden said. Studying those strains could reveal ways to make algae grow fuel more efficiently. The trick, Mayfield said, is identifying the most important genes, such as ones that could make algae produce more fat or grow faster.

Other UCSD research involves moving genes into the algae in order to force it to make the exact chemical building blocks needed for fuel, Golden said.

"You need a different mixture of fuel chemicals for a jet engine than you need for a truck than you need for some passenger cars," Golden said. "You could come up with a mixture that was a bio-gasoline, another that's a bio-diesel, another that's a jet fuel. You could actually get the cells to make the mixture that you want."

"At that point we are making designer algae," Golden added.

Lab work is tested in the field. Sapphire Energy takes its results out to algae ponds in Las Cruces, N.M. That state works well as a testing ground because of a number of nearby coal-fired power plants that belch carbon dioxide that algae need. UCSD researchers use pools of algae in California's Imperial Valley, about 120 miles east of San Diego.

"We already know about strains that produce tons of oil," said Steve Kay, dean of the Division of Biological Sciences at UCSD and another founding member of SD-CAB. "My lab has identified new strains of algae that grow specifically really well in the Imperial Valley, like we never imagined. This is like up-to-your-knees thick algae sludge."

With the Senate taking up climate legislation, algae fuels backers are working to influence policies that will buoy the research. Because they do not have the established political allies that coal, oil, natural gas and other industries have, the strategy, Zenk said, is to talk about fairness.

"You can't have these other energy technologies having better incentive than us," Sapphire's Zenk said. "What we're looking for is parity."

The other strategy is to find allies among other industries, stressing that algae is "just an above-the-ground oil field" that does not compete with ethanol or any of the other renewable fuels, Zenk said.

Algae also has linked up with coal, forming partnerships "with a large number of coal power plants," Zenk said. He did not say which ones. Because algae eats carbon dioxide, algae pools could be located near coal-fired utilities and swallow part of their carbon emissions, Zenk said.

"We're a good story for them," Zenk said. "We green their power up."

The Senate Environment and Public Works Committee is writing a climate bill but has not said yet what will be in it. The committee's chairwoman, Barbara Boxer (D-Calif.), has mentioned algae at recent hearings, including one July 30 in which she said that "the steps we take to address global warming, including incentives for the development of clean energy, such as wind, solar, geothermal, and algae fuel ... will lessen our dependence on foreign oil."

At an early July hearing on transportation's role in climate change, Boxer said that "in my own state, entrepreneurs are already making great strides in developing highly efficient clean electric and hybrid vehicles, and advanced renewable fuels based on algae." Boxer also invited Sapphire President Warner to testify at a May committee hearing on business opportunities and climate change.

There is new money for algae. The Senate bill that funds the Energy Department for fiscal 2010 includes $35 million for a "comprehensive research, development and deployment strategy focused on algae biofuels." That came about largely because Sens. Byron Dorgan (D-N.D.) and Bob Bennett (R-Utah), chairman and ranking member of the Energy and Water Appropriations Subcommittee, support algae, said Tim Peckinpaugh, partner with K&L Gates and a lobbyist for Sapphire Energy.

Dorgan has toured an Arizona algae project that uses carbon from a coal plant, and at a May hearing on beneficial reuse of carbon dioxide talked about how the algae ate some of the plant's carbon gas.

"Algae are the fastest-growing plants in the world," Dorgan said at that hearing. "They can double their bulk in a very short period of time. They can grow in wastewater and convert CO2 into a liquid fuel that's compatible with our existing fuel structure."

Money came through the House version of that Energy Department and water spending bill, as well. Reps. Brian Bilbray (R-Calif.) and Susan Davis (D-Calif.) secured $750,000 in funding for SD-CAB.

"Algae are widely seen as the most promising source of renewable alternative transportation fuels," Davis said in her request. "Algae can be grown on land that will not compete with food production, as do traditional row crops such as corn when used as a biofuel source."

Bilbray in his request said that "algae-based fuel has the potential to supply billions of gallons of auto and jet fuel that is clean, renewable and can be distributed using existing fuel infrastructure."

There are bills in the House and Senate to extend to algae fuels tax credits that exist for other renewable power sources. There is also talk, Peckinpaugh said, about changing a 2007 energy law that mandated an increase in the production of biofuels from non-food crops, such as cornstalks and switch grass. Called the renewable fuels standard, it mandated that the amount of biofuels in gasoline grow to 36 billion gallons by 2022 from 4.7 billion gallons in 2007. Of that total, 21 billion gallons must come from plants other than corn or sugar. Algae does not qualify as a biofuel under the law as it was written, and some lawmakers want to change that.

Another political goal might prove challenging to obtain.

If Congress creates a cap-and-trade system in which businesses buy and sell carbon pollution credits, Sapphire and SD-CAB want businesses to be able to invest in algae fuel projects in lieu of paying for greenhouse gas emissions. That option, called the offset program in the House climate bill, allows businesses to fund efforts that reduce carbon dioxide at levels equal to what the company is emitting.

Under the language in the House bill, neither Sapphire nor SD-CAB work qualify as an offset. In that legislation, offset projects must be new, starting after the cap-and-trade system begins in order to qualify.

Firms and scientists are racing to figure out how best to separate the oil produced in the organisms for biofuel. The San Diego area has become a hotbed for these efforts that are drawing investors.To many, algae is little more than pond scum, a nuisance to swimmers and a frustration to boaters.

But to a growing community of scientists and investors in Southern California, there is oil locked in all that slimy stuff, and several dozen companies are racing to try to figure how best to unleash it and produce an affordable biofuel.

The companies and several research labs have set up shop in the San Diego area, many of them in an area nicknamed Biotech Beach. There, about 200 biotech companies of all kinds are clustered near La Jolla on the mesa above Torrey Pines State Beach.

Together, the firms and organizations conducting algae research employ nearly 300 people with more than $16 million in payroll and bring $33 million annually into the local economy, according to the San Diego Assn. of Governments, and local officials see the potential for much more.

"It's a critical industry, and it's kind of exploded," San Diego Mayor Jerry Sanders said. "There's a long pattern of huge companies being spawned out of [UC San Diego] and our other research centers, and it's going to create a tremendous number of jobs."

National energy companies are converging on the fledgling industry. Exxon Mobil Corp. announced a $600-million partnership with La Jolla biotech company Synthetic Genomics Inc. in July. San Diego companies General Atomics and Science Applications International Corp. have received nearly $50 million from the Defense Department for algae fuel research.

Last year, $176 million was invested by venture capitalists to develop biofuel from algae, according to industry publication Biofuels Digest in Miami.

With the region's proximity to the ocean and its history with biotech businesses, San Diego is a familiar spot for clean-energy investors, Biofuels Digest editor Jim Lane said.

"It has all the magic conditions for the emergence of business life," he said. "San Diego wants to be associated with algae, while other cities have other fish to fry and think of algae as just one of many things."

Supplementing the research is experimental aquaculture, as farming in fresh- and saltwater is known. The arid Imperial Valley to the east is now home to several massive algae farms, one with nearly 400 acres of ponds in all shades of green being swirled by paddles to expose the organisms to more sunlight.

All of this activity has drawn its share of doubters.

Skeptics say that it's a beachcomber's fantasy, that it's too costly to cultivate any significant amount of algae, that fuel inside -- whether in the form of oil, ethanol, gas or hydrogen -- is too expensive to extract or produce on a large scale.

But in recent years, San Diego, along with Silicon Valley, St. Louis, Seattle and a few other cities, have disregarded the skeptics and emerged as hotbeds of algae biofuel research.

One of the nascent industry's major annual events, the 2009 Algae Biomass Summit, is headed to San Diego next month. It is put on by the Algal Biomass Organization, a Preston, Minn., group that seeks to promote commercial uses of algae products.

Seeking to unite and enhance much of the algae work underway in San Diego County is a new research consortium. It aims to help clear barriers to commercializing algae biofuels by identifying new algae strains and harvesting methods.

The San Diego Center for Algae Biotechnology was launched in 2008 with 16 founding partners from UC San Diego, the Scripps Institution of Oceanography, Salk Institute for Biological Studies, biofuel companies and more.

Until recently, "algae has been this complete backwater of scientific research," said the center's founding director, Steve A. Kay, who is also dean of biological sciences at UC San Diego.

"But we've all woken up with the realization that we are junking the planet."

Known as "nature's solar panels," the "amazingly clever little chemical factories" soak up carbon dioxide and sunlight, which is converted into oil through photosynthesis, Kay said.

Algae, he said, can be harvested more often and at greater yields than many other potential biofuel crops such as soybeans or grasses.

Unlike food and several other biofuel sources, algae is being eyed because it can thrive in difficult environments such as salty or polluted water or in the desert, freeing up valuable agricultural space.

Fuel from the microorganisms has already been tested in airplanes and is being groomed for use at NASA test facilities and in the Navy. Last month, San Diego-based biofuel gorilla Sapphire Energy unveiled its Algaeus plug-in hybrid vehicle, which will run on an algae-based renewable gasoline.

Scientists also envision using algae for more than just fuel, tapping it instead for fish or livestock feed, antibacterial products, foams for windmill blades and, in one futuristic vision, in cancer therapies.

In the 1990s, early research into algae biofuels stagnated as oil prices dropped and funding was siphoned off to cancer, AIDS and bioethanol studies, Kay said. Algae is now making a comeback, buoyed by the eco-friendly movement and concerns about dependence on traditional fuels. But the slimy stuff is no magic wand, experts say.

Expecting algae to make a meaningful dent in fossil fuel usage is still a tall order, experts said. The algal biofuel production process is often lambasted as inefficient by other biofuel competitors.

"We can certainly come very close, but we're not there yet and I'm not sure when we'll ever get there," said John R. Benemann, an algae biofuel consultant with Benemann Associates in Walnut Creek. "It's a significant challenge to get down to the price point, or even just the ballpark of fossil fuels."

The problem is translating successful lab experiments to an industrial scale. Mass algae biofuel production could require enormous pools or photobioreactors while growing a proportionally small amount of algae. Technology needs to be developed to systematically extract the oil from the organisms.

Algae-generated oil currently costs $20 to nearly $33 a gallon to produce, with some estimates soaring to $60. Conventional gasoline costs less than $5 a gallon.

"There's a valley of death between research and development and commercial development," said Lisa L. Mortenson, chief executive of Community Fuels in Encinitas.

Add California's heavy regulations, and algae biofuel production becomes an even more difficult business proposition, some complained.

Biofuel companies often have to wade through a tangle of permits, taxes and compliance measures in California. Aquaculture alone requires more than 15 permits, with more for waste disposal and water use.

The intensity of the algae hype is making some investors wary.

"The majority [of the efforts] are a gigantic hassle of time and capital because they're trying to make coal out of diamonds," said David Andresen, a clean-tech investment banker at Oracle Capital Securities. "There's such a high level of scientific illiteracy in the investment community that you can really wow investors."

Still, even Andresen is an investor in the industry, working with Kai BioEnergy Corp., a San Diego company named after the Hawaiian word for "ocean."

Although Kai can produce only about 20 gallons per minute while it needs 300 gallons a minute to be commercially viable on a large scale, Chairman Mario C. Larach is optimistic.

"It's just a matter of scaling at this point," he said. "If nature can do it, we can do it."

Arizona Public Service, the state’s largest electricity provider, has secured $70.5 million in stimulus funds to expand an innovative project that turns carbon dioxide emissions from a coal power plant into biofuel using algae. While part of the funds will be used to scale up the algae processing portion, some of the funds will also be used to investigate the potential benefits of turning the coal into a gas prior to burning it for power.

The concept of creating two products — electricity and fuel — from the same process is known as cogeneration. In this case, the cogeneration also helps to reduce environmental pollution. It’s an idea that has been gathering support as a way to make coal less polluting while finding an additional revenue source to pay for the pollution control itself. In fact, a while back I reported on a similar pilot project in Oregon.

Apparently, Arizona Public Service was able to convince the government that by combining the pollution-to-algae-fuel and coal-gasification research into one project, it was worthy of receiving such a large grant. It’s only the second stimulus research grant that has gone towards a carbon capture project, with the first being a project that compresses carbon dioxide for storage underground.

The project is being hosted at the 995-megawatt Cholla Power Plant in northeastern Arizona. Early results indicate that the algae are able to capture 70 metric tons of carbon dioxide per pond acre per year.

Personally I think we should wean ourselves off coal completely, but given that the US has huge reserves of the stuff and the political heirarchy is probably unwilling to go that route, we’re likely stuck with using coal for quite some time. So, if you can’t beat ‘em, make ‘em pollute less, right? While projects like this ultimately represent a crutch and a band-aid, they are still necessary to fix the climate crisis if we refuse to get off fossil fuels entirely.

The star says driving a plug-in Prius will allow him to save the world in his real life, not just on TV.

The couple who drove the Algeaus 3,500 miles across country say they're bringing the future of fuel into today's traffic. "The car, myself and Josh know no difference running on algae gasoline versus regular gasoline," said Rebecca Harrell, Veggie Can co-director.

Sapphire Energy produced a 5-percent algae-gasoline blend to power the cross country trek. The car's engine required no modification and the company's president says in a few years, cars may run entirely on algae.

"After you've refined it, it's exactly the same as the fuel we use today," said Cynthia Warner, Sapphire Energy president.

But homegrown algae can't be used. "This algae is very specialized. It's been developed specifically to create a high quality hydrocarbon fuel," said Warner.

Currently, Sapphire Energy is growing the green algae in New Mexico at a rate of 5,000 gallons per acre, per year. A barrel of algae would cost about $80, keeping it competitive with crude oil.

But the cost is not the only reason politicians are hitching a ride in the Algeaus. "Algae has the capability of powering our transportation sector without adding significant carbon dioxide to the atmosphere," said Rep. Jay Inslee.

Algae is the fastest growing plant in the world. When algae grows, the plant takes carbon dioxide out of the air and when it burns, it doesn't give off any of the heavy metals found in today's fuel.

Another positive about the alternative energy source - supporters say there's no food or fuel debate because algae requires less land and care than corn.

The process begins with water and algae. The company's president says the algae is grown in a pond with just sunlight and carbon dioxide to develop it. The plant produces oxygen, oil and the green stuff many are familiar with called biomass. After about seven days, Sapphire Energy harvests the mature algae, extracts the oil contained within the plant and leaves the biomass to be used as animal feed. The oil is then refined, ready to be used in car gas tanks.

To put the entire process in perspective, Sapphire Energy is one of about 60 companies looking into algae fuel. Investors have invested about $100 million in Sapphire alone.

JOSH TICKELL IS an environmental activist who works on many levels at the same time. The Louisiana-raised author and speaker's dozen-year peripatetic promotion of biofuels is captured in his convincing new documentary "Fuel," an extremely wide-ranging biopic, in-depth history of oil and inspiring forward-looking thriller ripe with intriguing new ideas.

We spoke with Tickell, pictured holding biodiesel fuel, and his wife, "Fuel" producer Rebecca Harrell, as they crossed the country in the Algaeus — a car running on biofuel derived from algae — raising awareness of their documentary. They'll join Rep. Steve Israel (D-N.Y.) on Thursday at a noon press conference on Capitol Hill.

» EXPRESS: "Fuel" points out the little-known fact that Hurricane Katrina caused horrible oil spills.» TICKELL When the tanks ruptured and the oil seeped out, it didn't just seep out into the land surrounding it, it actually spilled into the entire lower Mississippi basin. The Exxon Valdez spilled 11 million gallons. This was a nine-million-gallon spill and it went virtually unreported.

» EXPRESS: Who were you most excited to interview for "Fuel"?» HARRELL: The first was Sen. Lautenberg, D-N.J. We greatly respect him. Another was Robert Kennedy Jr. We drove to the Kennedy compound and waited and waited and finally he let us in. What we thought was going to be 15 minutes turned into an afternoon. And Josh and I were in tears — what he said was so inspiring and honest. It looked at that it is to be American and what it is to be patriotic. The last person who was really notable to me was [British industrialist] Richard Branson. He's been a completely unexpected champion of the movie.

» EXPRESS: How is fuel made from algae?» TICKELL People think gas came from dinosaurs, but the reality is that all oil on Earth came from single-cell photosynthetic organisms — phytoplankton and algae. Algae took carbon dioxide out of the atmosphere and put oxygen into the air and then became sequestered in the Earth's crust. That's what we're burning in our gas tanks — 150-million-year-old algae.[Algae-based biofuel] takes that process and squeezes it so that it takes place in less than a couple of weeks. Algae are the fastest replicating life-forms on Earth. They are also the most efficient photosynthetic organism: From the sunlight that falls upon them to the creation of oil — they produce it at a rate that is unequaled.

» EXPRESS: Is it true that recycling takes as much energy as producing new goods?» TICKELL There is far more energy used in producing new products. Also, things like high-tech recycling, hybrid cars — these are cutting-edge technologies and they will not succeed unless we use them. They are works in progress. They are steps along the pathway to a sustainable society. If we do not take the steps, we will not get to the destination. Hope is derived from doing something.

SAN DIEGO, Sept. 17 /PRNewswire/ -- The single largest year over yearpotential increase in the industrial age of food production may occur with theuse of a San Diego based alternative energy company's machinery. CircleBiodiesel & Ethanol Corporation has announced that their latest patent-pendingmachinery design enables previously inedible foods such as toxic strains ofalgae and Jatropha to be edible with an operation that can occur in less thanfour hours.

CEO Peter Schuh has calculated, using figures based on landmass and oceanacreage, the potential for the huge increase in production. "Many algae andother plants that were inedible should now be edible. We believe we are in agreat situation to help on the growing concern for world food production,"says Peter Schuh.

"We have devised an apparatus and method for the production of humanly ediblefood from algae, Jatropha and other currently toxic feedstocks. In the case ofJatropha, the feedstock is purged of two primary toxins, phorbol esters andlectin, that give the plant its disease and pest resistance. In the past,these toxins prevented use in human and animal nutrition," said Allen J.Schuh, Ph.D.

The procedure was developed by the Schuhs after years of research. The addedability of producing a protein-rich meal for human and animal consumptionenhances the potential of Jatropha as an economically viable feedstock forfuel and human consumption. "We believe that many other plants such as CastorBeans, Jojoba Beans, and Indian Beech can be detoxified with this apparatusand methodology, and then safely eaten," said Schuh.

The final edible product is suitable for storage or consumption. It is rich innutrients and protein and relatively low in carbohydrates and fats. Inpreprocessing, the carbohydrates are removed for ethanol production, and theoil is removed for biodiesel production. The oil-less cake has the texture ofsoy meal and can be used as a substitute for soy meal in various recipes,including pastry, desserts, soups, salads, or as a main course.

Those wishing to work with Circlebio to manufacture and distribute theapparatus should contact the firm at 760-579-9885, to schedule a consultationand visit, where Schuh will work with you directly.

Everyone in the room believes that algae is the next big thing. A cleaner alternative to what we fill up with now and a better solution to things like corn based fuels.

You may have heard big names like Continental airlines are already involved in experimenting with jet engines that run on algae.

But, now small companies are working on ways to make algae work in your car- like the Cyclone engine developed by Harry Schoell.

The South Florida based inventor is at the conference showing off his engines that runs "on any fuel" even ones derived from orange peels. But, it's its compatibility with algae that's getting all the attention.

Schoell says his engine can get the same gas mileage that the engine in your car, and a gallon of algae fuel, would today, run about a doll per gallon.

So will your car run on this anytime soon? That likely depends on something else that's green- money.

The Law of Algae wiki, launched at the end of August, serves as a guide to establishing an algae-to-biofuel project, highlighting legal and business issues a developer would face. Wikis are Web sites that allow for easy creation and editing from site users.

Stoel Rives LLP published the work, fully available on the wiki, and has done several other “Law of” books, such as “The Law of Wind” and “The Law of Building Green.” This is, however, the first time the law firm has published a book via a wiki. The format allows for continuous updates and changes. “So the document is always fresh,” said Mark Hanson, partner at the firm. “Algae in particular seems to be susceptible to a lot of change.” The firm will launch wikis for some of its past books, he added, and will stick with the format for future works.

Different considerations come along with different projects from the development perspective, so the books pinpoint specific issues that are common and apply to specific types of projects, Hanson said. “The ‘Law of’ books are intended to highlight various resources and issues as they move forward in their projects,” he said.

Algae is the most recent focus area because of the increasingly high interest in its biofuel production capabilities. “There are lots of new investments and tremendous efforts in the commercialization of algae to biofuel,” Hanson said. Unlike other commodities, such as corn, it does not compete with food production and is not subject to fluctuating prices. It also is an easily controlled feedstock, as it only requires sunlight, water, a harvesting strategy and a process for oil extraction, he added.

The wiki outlines elements of projects such as financing, intellectual property issues, technology issues and contracts, among others. It has attracted quite a bit of interest in its first month, Hanson said, as site visitors are appreciative of the new wiki format and the wide array of topics it addresses.

The firms’ attorneys compile the “Law of” works, Hanson said, drawing from their experience and expertise, which put them in a good position to identify issues developers will need to be aware of.

The governor and others talked up his record, high-speed rail, and algae at a tour of algae specialist Solazyme.

SOUTH SAN FRANCISCO -- California Gov. Arnold Schwarzenegger told a group of reporters that high-speed rail could do more than curb the pollution coming from jets. It could bring tourists too.

"It was a great experience. It was like going to Disneyland," he said, referring to a ride on the high-speed rail system in France last year. "It is not just about environmental benefits. It is a great tourist attraction. You could have people come to California just to ride the train.

"Our whole train system is outdated. We need to build high-speed trains, not ones that go 80 miles an hour to 100 or 120 miles an hour, but 220 miles an hour," he added.

Schwarzenegger, however, wasn't speaking at CalTrans headquarters. He was on tour of the facilities at Solazyme, the algae oil manufacturers in South San Francisco. Arnold took a tour, held up some beakers of algae and in general touted his environmental record, which, among governors, is quite high. This week he signed an order under which California will try to get 33 percent of its electricity from non-renewable resources not including big hydroelectric dams. California is now aiming to hit a goal of 20 percent renewable by 2010.

The governor was also asked whether he would follow the plan to adopt carbon taxes à la French President Nicholas Sarkozy. Schwarzenegger said France had a lot to offer – he even went to Cannes in his days as an actor – but dodged making any comments on the carbon tax.

Other highlights of the tour:

• Solazyme said that is has begun to ship algae oil to food producers. Earlier this year the company set up a lab to develop algal oils for food. The company can get food oils to market faster and fool oil actually sell for higher prices than petroleum or diesel. Imagine the cost of filling the car with virgin olive oil.

Solazyme discussed using algae oil for cooking before but this is the first time it has said it is selling algae oil for revenue. Right now, though, it's still a small amount.

• The company showed off a new food: algae milk. "It tastes like soy milk or almond milk, not cow milk," said CTO and co-founder Harrison Dillon. The milk, interestingly, is made from the protein, oil and fiber from the algae, not just the oil. Many algae companies have been trying to come up with strategies for selling the algae protein. So far, a number have said they will sell it to animal and pet food producers. Algae milk, potentially, could allow algae producers to sell the protein into a higher-margin market.

• Solazyme also talked up tests conducted by third parties that show its oil could reduce greenhouse gases. The firm hired by the state of the California to conduct environmental testing said that Solazyme's oil emits 85 percent fewer greenhouse gases on a well-to-wheel basis than conventional diesel while a study by National Renewable Energy Labs stated that algae oil reduces tailpipe hydrocarbons and particulates by 30 percent.

"We've taken a 130 million year old process or making crude oil and compressed it into the course of a few days," said Dillon.

But watch out when Solazyme calls its oil "crude." It is not a hydrocarbon (the stuff that comes out of ground). It is a lipid substance. In other words, it's "crude" in that it is unprocessed, but not "crude" in the way most of the world uses the term.

• The Cabinet Minister for Foreign Trade from France, who also attended, said that France intends to get 20 percent of its energy from renewable resources by 2020. That total does not include nuclear power.

To many, algae is little more than pond scum, a nuisance to swimmers and boaters.

But to a growing community of scientists and investors, there is oil locked in all that slimy stuff, and companies are racing to try to figure how best to unleash it and produce an affordable biofuel.

The companies have set up shop in the San Diego area -- around 200 biotech companies are clustered on a mesa above Torrey Pines State Beach.

Together, the companies and organizations conducting algae research employ nearly 300 people with more than $16 million in payroll and bring $33 million annually into the local economy, according to the San Diego Association of Governments.

"It's a critical industry, and it's kind of exploded," San Diego Mayor Jerry Sanders said. "There's a long pattern of huge companies being spawned ... and it's going to create a tremendous number of jobs."

National energy companies are converging on the fledgling industry. Exxon Mobil Corp. announced a $600 million partnership with La Jolla biotech company Synthetic Genomics Inc. in July. San Diego companies General Atomics and Science Applications International Corp. have received nearly $50 million from the Defense Department for research.

Last year, $176 million was invested by venture capitalists to develop biofuel from algae, according to industry publication Biofuels Digest in Miami.

Supplementing the research is experimental aquaculture, as farming in fresh and salt water is known. The arid Imperial Valley to the east is now home to several massive algae farms, one with nearly 400 acres of ponds.

All this activity has drawn its share of doubters. Skeptics say that it's a beachcomber's fantasy, that it's too costly to cultivate any significant amount of algae, that fuel inside -- whether in the form of oil, ethanol, gas or hydrogen -- is too expensive to extract or produce on a large scale.

But in recent years, San Diego, Silicon Valley, St. Louis and Seattle and a few other cities have disregarded the skeptics and emerged as hotbeds of algae biofuel research.

You really can drive across country on algae and a 700-pound battery pack, or so proved the crew behind the documentary Fuel . Embarking on September 8 and pulling into New York City today, just in time for the film’s premiere, the Algaeus covered 3,750 miles.

“It got 147 miles-per-gallon in the city,” says Fuel director Josh Tickell of the converted to plug-in Prius hybrid that he drove on a mix of battery power and algae fuel blended with conventional gasoline. The Algaeus did less well on the highway: 52 mpg, because of the lack of regenerative braking that recharges the battery, among other things.

The algae came from 22 acres of special ponds at Sapphire Energy’s research and development facility in New Mexico, where local strains of the microscopic plant grow in vats of saltwater while being fed CO2 that would otherwise go into Coca-Cola and other fizzy drinks, according to Tim Zenk, a spokesman for Sapphire.

The company claims that its algae produce at least 30 percent by weight of oil and they delivered approximately five gallons of gasoline derived from their algal oil to prove it. Refined by Syntroleum in Louisiana, the algae gasoline behaved no differently in the car, according to the driving crew.

Of course, that’s because the mix in the cylinder was roughly five percent algae-derived gasoline and 95 percent 91-octane premium gasoline. And with the addition of a second battery pack in the trunk, courtesy of Plug-In Conversions, the Algaeus could travel 25 miles on electricity alone (after six hours of charging).

In the 10-day journey, the crew did not manage to get rid of the new car smell, but they did manage to get some thumbs up—and break some speed limits—on the long trek. They also proved that algae fuel doesn’t smell too much like a neglected swimming pool, although some of the unrefined oil can be redolent of the ocean, Zenk says.

“We really view it, not to sound grandiose, as an Apollo mission for algae and renewable fuel,” says Fuel producer Rebecca Harrell, of the first cross-country trip on algae fuel and battery power.

Ultimately, the filmmakers hope to offer an insight into alternatives that are here today. After all Sapphire claims to get about 5,000 gallons of algal oil per acre of pond. The next step? Raising $1 billion to build a 10,000 barrel a day facility in New Mexico, Zenk says. “At that level, we can produce algal oil for $60 to $80 per barrel.” Or roughly the cost of conventional oil today. And that might herald the real start of alternative fuels from algae.

The world of biomass is bursting with hope for algae, however, we must avoid the course of irrational exuberance that plagued past technologies. Many look to algae as the renewable resource to win the battle over global warming, and provide the U.S. with energy security. In reality, algae hold great promise as a resource that, if developed correctly, could become a sustainable biomass source for energy and fuels. We are still years away from developing meaningful quantities, and prudence must govern the safe development of natural algae strains that will have no adverse impacts on ecosystems.

No one can deny the potential of algae. Unlike traditional oilseed crops, which produce 10 to 100 gallons of oil per acre, algae are mega oil producers capable of producing 1,000 to 5,000 gallons of oil per acre. Oil collected from algae looks very similar, chemically, to crop oils and can be converted to renewable fuel using existing technology. Algae also do not compete with food sources, can grow in nonpotable and saline water on otherwise nonproductive land, treat polluted waters and recycle carbon dioxide (CO2). So if algae are so phenomenal, why aren’t we using them to produce biofuels on a large-scale today?

Many challenges to large-scale algae-derived renewable fuel exist and span the entire process from algae strain selection, through harvesting, to fuel conversion.

Although great strides have been made, algae production remains a challenge. Algae grow in shallow ponds or bioreactors where they use photosynthesis (sunlight, CO2 and other nutrients) to grow, reproduce and generate oil. Advancements are needed to optimize the supply of light, CO2, and nutrients to the algae.

Because of algae’s small size, and tendency to plug/foul filters, harvesting it from water is challenging. Once harvested, the algae undergo energy-intensive drying and oil extraction processes. Research is ongoing to find ways to more efficiently collect oil and algae solids from their waterborne state.

Economics are also a major challenge facing algae’s future in the renewable fuels industry. Currently, the price of feedstock makes up the largest cost of production and can contribute 80 percent to 90 percent of the final fuel price. The hope is that algae will have the ability to produce oil at a price competitive with petroleum oil at $1 to $2 per gallon. To achieve this, technology advancements need to be demonstrated, but additional characteristics of algae will also need to be fully utilized. Treating impaired water and capturing CO2 will improve the economic viability of algal-based systems. Additionally, the identification and extraction of other valuable products within algae, such as nutrients or pharmaceuticals, will aid in the economic viability of algae.

Working to overcome these challenges and unleash the potential of algae, the Energy & Environmental Research Center continues to develop pathways to convert algae to renewable fuels. The EERC is currently teamed with Science Applications International Corp., and others to further demonstrate the EERC process to convert any oil, including algae oil, to “drop-in” compatible fuels.

The EERC has maintained its focus on producing drop-in compatible renewable fuels, meaning that they are virtually indistinguishable from traditional petroleum-based fuels. The EERC and others are engaged in developing an economical process for the production and subsequent conversion of algal biomass to liquid fuels that are identical to gasoline, jet fuel and diesel. These algae-derived renewable fuels have the potential to rival petroleum fuels and truly be the new super fuel.

Chad Wocken is a senior research manager at the EERC. Reach him at cwocken@undeerc.org or (701) 777-5273.

Nevada-based W2 Energy Inc. (www.w2energy.com), a green energy equipment developer, expected to have its patented algae bioreactor up and running in Guelph, Ontario, in mid-September, according to CEO Mike McLaren, after which the company will begin selling its bio-oil and searching for partners to help commercialize the bioreactor. “Our company strategy is joint venture instead of equipment sales,” McLaren said.

The Sunfilter bioreactor will grow algae to produce bio-oil for biofuels and will be used to sequester carbon dioxide from the company’s waste-to-energy processes. It also can be sold separately to algae producers, biodiesel producers, labs, aquaculture companies, and coal and petroleum plants, according to W2. A purchase cost for the equipment, which took a couple years to develop, has not been established, McLaren said.

Inside the bioreactor, low-power ultraviolet lights, in combination with gases, feed the algae so it grows and fills the tubes with blooms, according to W2’s Web site. When the blooms have reached an appropriate density, a set of magnetic rings inside the tubes scrapes the blooms clean and pushes the algae to the upper manifold, where compressed air pushes it out. The algae is then compressed, dried and then either gasified or fed into a biodiesel reactor to produce biodiesel.

W2 also has developed a multifuel reactor to produce ultra-low sulfur diesel, a blend of JP8 jet fuel or gasoline; a plasma-assisted gasifier; a SteamRay rotary system engine that converts energy from steam or fuel combustion into a rotary force; small energy generating systems; and the Non-Thermal Plasmatron. The plasmatron, designed to gasify hydrocarbons to produce syngas, also is being built in Guelph and should be operational in mid-September, McLaren said. W2 has licensed its technologies to Alpha Renewable Energy in India and is working with China and several corporations in the U.S., McLaren said.

The company also developed a 4-ton municipal solid waste system that was not sold as planned because the buyer’s funds were not adequate, he added.

Since W2 announced at the beginning of August that the bioreactor will reach commercial scale, many parties have expressed interest in purchasing it, according to McLaren. “It’s hard to keep up,” he said.

As I write this editor’s note the morning after Labor Day, it is still tough to get my mind around the fact that summer is virtually gone. While most of September is technically summer, the month brings with it the aura of change. After its long hiatus, football returns to sports’ center stage. The air feels a little crisper.

I imagine many feel that the summer was too short. There is always so much to do, but never enough time to do it. I was well aware of this going into the Labor Day weekend, so I made a concerted effort to organize the tools and equipment in my Quonset. For those of you who don’t know what a Quonset is, it is a shed that looks like half of a huge cylinder sticking above ground, typically used by farmers for machinery storage and maintenance. Surprisingly, the chore was not so terrible—actually it was kind of fun, in a way, going through years of junk and disarray—and afterwards I wondered why I had procrastinated over the years.

In Biodiesel Magazine, a topic we’ve put off covering for some time is algae, mostly because of the difficulty in ascertaining legitimate progress from mumbo jumbo investor hype. To tell the truth, I am skeptical of many claims by companies working on algae cultivation and oil extraction. In the past, this magazine may have been guilty of giving too much coverage to algae, while at the same time not understanding the particulars well enough. But after the recent bombardment of news about companies and government agencies such as ExxonMobil and NASA spending hundreds of millions of dollars in algae research, assistant editor Susanne Retka Schill and I began talking about how to approach a grounded feature article on algae. The result is her story titled, “The Promise and the Reality,” on page 44. Check it out and let Retka Schill know what you think.

The theme of this month’s issue though, is trade. In writing a featured article on international trade and genetically modified organisms (GMO), associate editor Nicholas Zeman learned of an interesting development that was unfolding in real time. A ship loaded with intermodal containers of soybean meal was refused EU entry at a Spanish port, not because of problems with the soybean meal itself but because testing revealed containers tainted with GMO corn dust. Zeman raises some interesting points on this topic in “Mixed Signals,” on page 40.

In a separate article, Zeman gives a thorough rundown of project development activity and biodiesel markets in Asia-Pacific, including the Philippines, Malaysia, China and Japan. Biodiesel is a globally traded fuel, and what’s happening in eastern and southeastern Asia impacts those on the other side of the planet. Read “Pacific Rim Panorama” on page 36 for the full story.

Lastly, Retka Schill provides an overview of the collaborative effort between the U.S. Navy, Biodiesel Industries and more recent partner Aerojet Inc., an aerospace company that helped land man on the moon and maneuver the international space station. With Aerojet’s involvement, the partnership is making strides in automation, process controls and remote controllability. Read “Rocket Science Meets Biodiesel” on page 30. And enjoy the cool, crisp autumn weather while it lasts.